Conventional vs DSCR
Conventional investment loans (Fannie/Freddie) are the cheapest investor financing at 6-7.5%, but require W-2 income + low DTI + max 10 financed properties. DSCR loans are 100-200 bps more expensive (7.5-9.5%) but qualify on property cash flow with no income docs and no property cap. Use conventional for your first 10 doors; DSCR after.
| Conventional | DSCR | |
|---|---|---|
| Speed to close | Conventional: 30-45 day close. | DSCR: 21-35 day close. |
| Cost | Conventional: 6-7.5% rate. Cheapest investor financing available. | DSCR: 7.5-9.5% rate, 100-200 bps premium. Worth it for the qualifying flexibility. |
| Qualifying | Conventional: W-2 income, DTI ≤ 45%, 2 years tax returns, 680+ FICO, 20-25% down. | DSCR: property cash flow only. No personal income docs. 660+ FICO, 25% down. |
| Best use case | Conventional: investor's first 10 financed properties, especially when investor has W-2 income and clean credit. | DSCR: any property past the 10-property conventional cap; properties bought by self-employed borrowers; portfolio scaling. |
Which to use when.
Use conventional financing for your first 10 financed properties — the rate savings are significant. Transition to DSCR for property 11 and beyond, OR earlier if you're self-employed and your conventional underwriting is messy.
Frequently asked.
What's the difference between conventional and dscr loans?
Conventional investment loans (Fannie/Freddie) are the cheapest investor financing at 6-7.5%, but require W-2 income + low DTI + max 10 financed properties. DSCR loans are 100-200 bps more expensive (7.5-9.5%) but qualify on property cash flow with no income docs and no property cap. Use conventional for your first 10 doors; DSCR after.
Which is cheaper — conventional or dscr?
Conventional: 6-7.5% rate. Cheapest investor financing available. DSCR: 7.5-9.5% rate, 100-200 bps premium. Worth it for the qualifying flexibility.
Which closes faster?
Conventional: 30-45 day close. DSCR: 21-35 day close.
When should I use conventional vs dscr?
Use conventional financing for your first 10 financed properties — the rate savings are significant. Transition to DSCR for property 11 and beyond, OR earlier if you're self-employed and your conventional underwriting is messy.
More head-to-head.
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